Macro Roundup (Jun 15)

SHANGHAI, Jun 15 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar edged lower against a basket of major currencies on Monday but its moves were largely muted as traders awaited a much-anticipated US Federal Reserve meeting later this week that might signal a change in the outlook for US monetary policy.

Currency markets settled in tight ranges with implied volatility plumbing to multi-year lows after last week’s strong inflation readings and a dovish European Central Bank meeting failed to dislodge currencies from recent trading levels.

“It’s all about the FOMC this week, and we’ll be watching to see exactly how much taper talk has really been going on and if it has any impact on the medium term outlook,” Brad Bechtel, global head of FX at Jefferies, said in a note.

“My guess is that (Federal Reserve Chair Jerome) Powell deftly kicks the can down the road once again and pushes the time frame for any ‘real’ taper talk to later in the summer,” Bechtel said.

The dollar index, which measures the greenback against a basket of six currencies, was up 0.1% at 90.427. Last week the index rose 0.4%, its largest weekly change in five weeks.

On Wall Street, US stock futures were steady in overnight trading on Monday after the Nasdaq Composite and S&P 500 registered new record highs ahead of the Federal Reserve’s latest monetary policy meeting.

Dow futures fell just 20 points. S&P 500 futures were flat and Nasdaq 100 futures ticked 0.09% lower.

On Monday, S&P 500 gained 0.2% to close at a new record of 4,255.15. The Dow Jones Industrial Average, however, fell 85 points.

The Nasdaq Composite was the relative outperformer, gaining 0.8% to close at an all-time high of 14,174.14. Investors are pouring back into growth stocks as bond yields keep falling. The 10-year Treasury rate hit a three-month low last Friday and hovered around 1.5% on Monday.

Bitcoin rose to $40,000 on Monday after Tesla CEO Elon Musk said Sunday that the company will resume bitcoin transactions once it confirms there is reasonable clean energy usage by miners.

Oil prices ended mostly unchanged on Monday, after hitting their highest levels in more than two years, as growing US crude production and Britain’s delayed COVID-19 reopening dampened expectations for fuel demand growth and tighter supplies.

The market reacted negatively to a US Energy Information Administration (EIA) forecast that shale oil output, which accounts for more than two-thirds of US production, was expected to rise by about 38,000 barrels per day (bpd) in July to about 7.8 million bpd.

Brent settled up 17 cents at $72.86 a barrel. Earlier in the session, it reached $73.64 a barrel, its highest since April 2019.

US West Texas Intermediate fell 3 cents to settle at $70.88 a barrel, after earlier touching $71.78 a barrel, its highest since October 2018.

Gold prices slipped as much as 1.7% on Monday, as some investors feared the US Federal Reserve may outline a path for scaling back its expansive monetary policy at a two-day meeting this week.

Spot gold fell 0.7% to $1,863.98 per ounce by 1:43 p.m EDT (1743 GMT) after hitting its lowest level since May 17 at $1,848.49. US gold futures settled 0.7% down at $1,865.9.

Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said there could have been some liquidation in gold ahead of the Fed’s policy meeting, which begins on Tuesday.

European stocks advanced to start the week as investors looked ahead to the June meeting of the US Federal Reserve.

The pan-European Stoxx 600 gained 0.25% by the close, paring some of its earlier gains after closing last week at a record high. Oil and gas stocks climbed 2% to lead gains while autos fell 1.1%.

The Federal Open Market Committee will meet on Tuesday and Wednesday. The Fed is expected to leave monetary policy unchange6 and again downplay talk of tapering down its stimulus program. However, markets will be watching for hints as to whether the central bank is starting to worry that the current spike in inflation may not be transitory.